Court of Appeal’s guidance on the Party Wall Act and basement construction

In Gray v Elite Town Management Ltd (unreported), the Court of Appeal considered a number of issues, including section 7(1) of the Party Wall Act 1996 in the context of a building owner’s basement works. The court concluded that there is no absolute obligation on party wall surveyors to authorise a design that causes the minimum of inconvenience to the adjoining owner. The duty under section 7(1) concerns the manner in which construction works are carried out and does not extend to the scheme chosen.

Factual background to the appeal

Mr Gray is the owner of 7 Ennismore Mews, London and Elite Town is the owner of the adjoining property, 9 Ennismore Mews. Before the Court of Appeal, Mr Gray was the appellant and the adjoining owner (as defined under the PWA 1996); Elite Town was the respondent and building owner (as defined).

In 2001, Mr Gray had constructed a basement at his property by excavating soil and installing contiguous piles around the new space. About ten years later, Elite decided to construct a basement under its property by underpinning the walls, including the party wall with Mr Gray’s property. In August 2012, appointed surveyors made a party wall award approving the proposed works.

However, two problems emerged after construction works began:

Some of Mr Gray’s piles had deviated and crossed under the party wall.

In early 2013, the first party wall award was modified by a second award altering Elite’s basement design. The parties subsequently agreed that the second award was ultra vires and a nullity.

During 2014, after cracking appeared on the party wall in his property, Mr Gray spent £1,320 on repairs. Elite also served another party wall notice on Mr Gray, proposing underpinning of the party wall and doing work as necessary on the projecting piles. Both parties appointed professionals to act as their surveyors, although Mr Gray’s choice was not a surveyor but a trainee architect who acted in accordance with his wishes. The parties could not agree on a third surveyor, so one was appointed by the local authority.

In October 2014, the third surveyor’s award was published. This authorised Elite to carry out works using mass concrete underpinning of the party wall. The award also provided that Mr Gray was entitled to recover his costs under section 10 of the Party Wall Act 1996, but had provided insufficient particulars to determine quantum.

At this point, Mr Gray sought a declaration that the first award was ultra vires and claimed £1,320 in damages. He also appealed against the third award, in particular on the basis that the third surveyor was wrong to authorise the underpinning scheme in the third award as it caused more inconvenience to him than other possible schemes.

The judge refused to grant the declaration sought, but awarded Mr Gray £1,320 for the cracked walls. He rejected the claim that the surveyor had been wrong to authorise the underpinning scheme, but varied the third award so as to entitle Mr Gray to payment under section 11(11) on the basis that Elite was using the works previously carried out by him. In respect of costs, the judge held that Elite should pay only one third of Mr Gray’s surveyor’s costs, since she had not exercised her own professional skill and had simply done what Mr Gray wanted.

The judge also granted permission to appeal against his decisions on both the validity of the first award and the party wall appeal. However, the latter permission was a nullity because it concerned a second appeal in respect of which the judge lacked jurisdiction to grant permission (Clark (Inspector of Taxes) v Perks (Permission to Appeal) [2001] 1 WLR 17). That matter was therefore dealt with as an application for permission to appeal with an appeal to follow, if granted.

Permission to appeal application and appeal

The issues on the permission application were whether:

Section 7(1) of the PWA 1996, which obliges a building owner not to cause unnecessary inconvenience to any adjoining owner or occupier, imposes a duty on party wall surveyors to authorise the construction solution that causes the minimum inconvenience.

The scheme approved in the third award was suitable.

Mr Gray should have been awarded his surveyor’s full fee.

The issue on the appeal was whether the judge should have granted the declaration Mr Gray had sought.

Before the Court of Appeal

The Court of Appeal refused the application for permission and dismissed the appeal.

Party wall surveyors had to have due regard to both the building owner and the adjoining owner in making an award. However, there was no absolute obligation on them to authorise a design that caused the minimum of inconvenience. The duty in section 7(1) concerns the manner in which construction works are carried out and does not extend to the scheme chosen (Minturn v Barry [1913] AC 584 and Gyle-Thompson v Wall Street (Properties) Ltd [1974] 1 WLR 123 applied). Whatever a surveyor decided would inevitably cause some degree of inconvenience to both parties.

The scheme approved in the third award was satisfactory from an engineering point of view.

The judge had adopted an entirely proper approach in reducing the recoverable fees in respect of Mr Gray’s surveyor. She had been appointed to act as a party wall surveyor but had largely done what Mr Gray had told her to do, rather than exercising her own independent view and expertise. None of the issues raised in the permission application gave rise to any point of principle or practice meriting a second appeal. Permission to appeal was therefore refused.

There was no worth in granting a declaration in respect of the first award’s validity. Instead, Mr Gray had been awarded £1,320 damages and there was no error of principle in taking that route to compensate him in respect of the problems arising from the works the first award authorised. Declarations were a discretionary remedy. The judge had been entitled to exercise his discretion to decline declaratory relief.

Crispin was instructed by Child & Child and appeared for Elite Town Management Ltd.